Foreign portfolio investors have turned net sellers again in September, offloading stocks worth ₹35,860 crore, with the selling continuing into October with ₹18,513 crore pulled out in just two trading sessions, according to data from NSDL. This trend has caused the Nifty 50 to decline 14% year-to-date, marking its worst performance since 2011 and positioning it for its biggest annual decline since 2011, when it crashed 24.62%. The outflows came after FPIs invested ₹20,200 crore in July and ₹29,630 crore in August, with total FPI withdrawals from Indian equities in 2026 reaching ₹2.69 lakh crore, surpassing the ₹1.66 lakh crore outflow recorded during the whole of 2025. However, the foreign selling has been concentrated in the secondary market, with FPIs continuing to pour funds into IPOs, investing ₹8,551 crore in the primary market. According to EPFR Global's Cameron Brandt, oil prices and India's oil dependency have become major factors for investors when weighing up emerging markets, with markets with high oil dependency, of which India is certainly one, not faring well.
Foreign institutional investors have staged an unprecedented sell-off in October, with FIIs selling ₹17,145 crore worth of Indian equities in the first three trading sessions of the month, as reported by ET Now. The selling pressure comes amid a challenging global backdrop, with US 10-year Treasury yields surging to 5.3%, reaching their highest levels since 2002, prompting global asset managers to redirect risk capital into safe-haven sovereign debt instruments. The US Dollar Index has reached an 18-month peak at 102.2, compounding exchange rate risks across emerging markets, while Brent crude oil prices are sustaining above $100 per barrel, creating additional pressure on India by driving up energy import costs. Despite the heavy foreign selling, domestic institutional investors have remained net buyers, purchasing ₹20,312 crore worth of equities in October so far, with the combined FII-DII flow for October remaining positive at about ₹3,167 crore. As per Bajaj Broking Prive, FIIs/FPIs were net sellers of approximately ₹2.72 trillion over the trailing 12 months, while DIIs recorded net purchases of around ₹8.54 trillion during the same period.
The Nifty 50 has experienced significant weakness, plunging 14% year-to-date and marking its worst September performance since 2018. The index fell 3.14% over the last week and 0.84% the week before that, according to ET Now Digital. The latest decline has widened the Nifty's CY26 year-to-date loss to 14%, with September 2026 becoming the second-worst month for the Nifty in 2026 after March, when it declined 11.31%. This brutal selloff has caused the Nifty to close each of the last eight weeks lower, its biggest weekly losing streak in 25 years, as the market's performance has been weighed down by the reversal in foreign investor sentiment towards Asia's third-largest economy. However, benchmark equity indices showed signs of recovery on Monday, with the BSE Sensex jumping 472.77 points to settle at 72,382.47 and the NSE Nifty climbing 133.80 points to end at 22,555.75, supported by easing oil supply concerns and positive global cues.
Market breadth remained severely negative, with 45 Nifty constituents ending September in negative territory while only five stocks managed to deliver gains. Adani Ports emerged as the best performer, gaining 13% during the month, followed by Dr Reddy's Laboratories with a 7% rise. Coal India advanced 6%, while ITC gained 3% and Adani Enterprises rose 2%. However, Thursday's session saw significant losses with Maruti Suzuki falling 4.59%, M&M declining 3.27%, Tata Steel dropping 3.01%, Adani Ports down 2.69% and Eternal declining 1.86%. Among gainers, Infosys jumped 4.02%, TCS gained 1.43% and HCL Technologies rose 1.38%. Other major losers included HUL, BEL, Trent, NTPC, Larsen & Toubro, Bajaj Finance, Reliance Industries, Titan, IndiGo and Bharti Airtel. In contrast, Infosys, HDFC Bank, Kotak Mahindra Bank and HCL Tech were among the stocks showing gains during the session.
The weakness was broad-based across all major sectors, with Motilal Oswal describing September's market breadth as 'adverse'. Technology was the worst-performing major sector, declining 11% month-on-month, followed by Financials excluding banks and automobiles with declines of 9% each. PSU banks fell 7%, while capital goods declined 6% during the month. On Thursday, the Nifty Auto index fell 3.46%, remaining among the worst-performing sectoral indices despite recovering from its day's lows. Auto stocks faced selling pressure following September sales updates, with Bajaj Auto's domestic two-wheeler sales falling 9% year-on-year and M&M's tractor sales declining 21%, though M&M's overall sales rose 15%. Persistent FPI selling has contributed to a moderation in Indian equity valuations, with the benchmark Nifty 50 losing more than 19% in dollar terms since the beginning of the year and currently trading at less than 17 times one-year forward earnings, below its five-year average of 19.5 times, according to Bloomberg data.
